MAPS 3 Madness

Oklahoma City residents have a choice to make on Tuesday, December 8. Do we continue to pay a penny of sales tax to support some new stuff for our City or not?

Many reporters and bloggers around town have already weighed in on one side or the other. One point that appears to have gone unnoticed is that of basic fairness. So, let’s look at fairness.

First, let’s go back to those wonderful memories of economics classes we took in school.

To be specific, let’s talk about progressive and regressive taxation. If the terms progressive and regressive are not part of your most treasured memories from school, read this next paragraph. Otherwise, skip on to the next!

Progressive taxes are those that impose higher rates for those taxpayers who have the greatest ability to pay. That is, the wealthiest taxpayers, or those in the highest income brackets, pay higher tax rates than those who have less income or wealth. Regressive taxes are taxes that place a heavier tax burden on those with less wealth or lower income. For example, a sales tax is regressive since low-income families have little choice but to spend everything they make and thus pay sales taxes. They pay a higher percentage of their income in sales taxes than do those who are wealthy enough to save or invest—those who need not spend their entire paycheck just to cover basic necessities. Some cities and states attempt to remedy this situation by exempting groceries from sales taxes, or providing some sort of tax rebate for low-income taxpayers. Our City does not have any program to remedy the regressive nature of sales taxes.

Note that both MAPS projects have been financed by sales taxes. Cities find sales taxes easy and inexpensive to administer. Imagine the difficulty in implementing a city income tax! Still, there are some important questions to ask about MAPS 3.

Where is the money going?

Where is the money coming from?

Who benefits?

The various projects are listed and described on several sources listed below.

City Government Website
Doug Dawgz Blog
Oklahoma Gazette MAPS 3
Oklahoma Gazette Voter Opinion Article
Oklahoma Gazette).

So, vote on Tuesday, December 8! And when you do, ask yourself if a new convention center paid for by regressive taxes, is what our city needs. I don’t think so.

Arden Rea lives in Oklahoma City.

Warning⎯Competition Can Be Hazardous to Your Health

Economists like competition, and politicians all over the country have acquired this mindset as well. Politicians here in Oklahoma are especially enamored with competition (except when it involves third parties!) and become very braggadocious when discussing their love of competition. We are proud of how tough we are! Our ancestors were pioneers and cowboys! Because we are so tough, we can face any competition thrown at us, and it’s only those sissy city slickers who might be afraid.

I was reminded of our love of competition when a friend sent me an article about our national health care dilemma. It’s quite a long article, but well worth reading¹. The subject is the perplexing high costs of medical care in two different cities in Texas. (Oklahomans always enjoy puzzling over the quirks of our southern neighbors.)

An economist, the thing that jumped out at me was competition. Competition sometimes hinders the quality of medical care and simultaneously raises costs, and this can occur at several different levels within the medical-industrial complex. The article relates a situation in which physicians who are reluctant to collaborate with colleagues in delivering medical care duplicate tests and prescribe unnecessary procedures. It is not difficult for us to envision doctors’ refusal to collaborate¬. After all, pride alone would lead to wanting to be the only star on the patient’s horizon. Then there are the questions about exactly who gets to prescribe what, and to whom financial rewards go. The resulting lack of cooperation leads to a duplication of services, unnecessary services, and extra expense with no better health outcome for the patient. In some cases, the outcome is even worse, due to risks associated with tests and procedures. A combination of pride (concern of students of human nature) and greed (concern of economists but called “profit motive”) interact and the result is unfortunate.

Additional examples of medical insanity include the relatively new practice of advertising. There is no need to elaborate about the proliferation of often-embarrassing advertisements in American media. Creative people are working to bring us advertising to encourage us to “choose” hospitals, clinics, and medications. With all the problems our society has, couldn’t these bright energetic people be using their talent somewhere else?
Anywhere else!

And one of my all-time favorites involves high-tech mega-gadgets purchased by hospitals. A terrific example is the introduction of the Gamma knife in the mid 1990s. Everyone wanted a Gamma knife, though the types of ailments for which a Gamma knife is needed are quite rare. One surgeon threatened to leave a hospital if he didn’t get his Gamma knife. Every hospital administrator felt her hospital would “lose out” in the race to profitability if she didn’t buy a Gamma knife. The result, of course, was too many Gamma knives, under-utilization, and bloated costs for everyone².

The long-accepted economic theory, that competition is the inescapable best solution to all human ills, falls flat. But we find it hard to turn loose of the idea. We feel we must assume the worst about our neighbors; they are our competitors—they will take advantage of us if they have the chance. This assumption can bring out the worst in us, and so it goes.

Mayo clinic is often seen as an example of an alternative economic arrangement. Doctors are not financially rewarded for each medical procedure. My question is, how did the Mayo clinic arrive at this model? Did they dig up the writing of radical economists and read about wasteful competition? Were they motivated by knowledge of human nature or psychology? What cultural factors would have to exist in order for a Mayo clinic model to work? Our confidence in competition, our certainty that it is an inevitable natural law, and the acclimation of our culture to competition has led us to a very dark place. We need a new vision.

Arden Rea lives in Oklahoma City.

FOOTNOTES

1.  Atul Gawande, “The Cost Conundrum,” New Yorker, November 12, 2009

http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande.

2.  George Anders, “High-Tech Health: Hospitals Rush to Buy A $3 Million Device Few Patients Can Use — Surgeons Want Gamma Knife For Certain Brain Cases And Often Get Their Way — Two Machines 10 Miles Apart,” The Wall Street Journal, April 20, 1994, pg. A.1

Religitics

It is dangerous, and generally unwise, to talk about politics and religion. The trouble is, here in Oklahoma, they’re the same thing.

Christian fundamentalists have long dominated Oklahoma, and when I was young most fundamentalists were Democrats. That changed with the election of Ronald Reagan. At that point fundamentalism became Republican. Fundamentalists, who had always had enormous strength of conviction about religious matters, expanded these convictions to include free-market economics and other right-wing political positions. Suddenly de-regulation and union bashing were on par with doctrines of redemption and atonement. Oklahomans responded to those who questioned for-profit health care as if the questioner had advocated atheism or moon worship.

Americans who live outside the Bible Belt might be puzzled and ask why we can have such a blind faith in markets that sometimes fail catastrophically. How did a religion founded by a guy who said, “Love your neighbor as yourself,” come to embrace dog-eat-dog capitalism? To understand this, one really needs to understand the theology that is prevalent in Oklahoma.

Oklahomans believe strongly in sinfulness⎯especially the sinfulness of their neighbors. Each Oklahoman knows he is redeemed, but he also knows that each person meeting him on the street is sinful. This belief, unfortunately, leads us to mistrust others. When the idea of a free market came to the fore, bringing with it the idea that each individual acts in her own self interest, maximizing her own welfare with no particular obligation to others, the idea dovetailed nicely with the way we already perceived each other. It was easy enough for Oklahomans to meld the conventional economic theory of homo economicus into the religion of Oklahoma orthodoxy.

So, what am I arguing for? Two things.

First, a reexamination of Oklahoma orthodoxy. Yes, all of us make mistakes, some big some small. Some mistakes have far-reaching consequences; some are almost meaningless. We are capable of great evil, or great good. We are free to choose which path we will pursue. We do not need to assume the worst about others. Oklahomans lack of trust in their neighbors leads to an exaggerated sense self-reliance that sometimes borders on the ridiculous.

Second, let’s learn our history. The idea that greed is part of a system (Invisible Hand) that leads to maximizing community welfare came from Adam Smith, an 18th century Scottish philosopher. Smith was a deist, rather than a Christian, and he never claimed any sort of relationship between his ideas and Christianity.

A willingness to examine long-held beliefs, accompanied by knowledge of history could give Oklahomans a chance to form a different perspective. We no longer need to accept laissez faire economics as the inevitable reality that can and need never be changed.

Arden Res lives in Oklahoma City.

Big = Good, Except When It’s Not

The various proposals for health care reform in Washington have people talking here in Oklahoma. Even though a single-payer system is apparently not an alternative Congress is considering, some Oklahomans are convinced it is a highly likely outcome. Many Oklahomans seem to feel that a government that is powerful enough to provide health care for everyone is, well, just too powerful. Governments should have limited power–enough to start and conduct wars, manage nuclear weapons, put people in prison–little things like that, but not the amount of power necessary to provide health care. That would be overstepping the bounds of a safe and manageable government.

The puzzling thing is Oklahomans (and many other Americans too) seem to believe that government of bathtub-drowning proportions is ideal while insurance company proportions can be gargantuan with no ill effect. Insurance companies can refuse to sell insurance to people who are likely to need care, drop people who become ill, make mysterious impossible-to-explain “mistakes” that delay payments, and pay top executives ridiculously high salaries. Oklahomans face this very bravely. But the government really scares us.

We don’t especially like insurance companies, but our distrust of government is much greater than our distrust of corporations. How to explain this? We know we can’t vote for the leaders of corporations. Even though we can elect the leaders of our government, we don’t trust them. (And why should we when they get campaign contributions from insurance companies?) We see the private sector as “good” and the public sector as “bad.” We always like the word “free,” and when the business sector can mention the term “free enterprise” or “free market” that sounds really good to Oklahomans. Perhaps if the government described itself as a “free republic”–as in free from King George III–we would like it more.

For most of us Oklahomans however, the issue seems to come down to taxes, costs, and ultimately, how we view our fellow citizens.

Let’s take taxes first. We fear that a government health plan would take too much money in taxes. We would rather pay that money to an insurance company in premiums than see a government plan that would take our money in the form of taxes. That way, people who can afford it pay the insurance company. Then, they fight the insurance company to get claims paid. But, the silver lining is, since it is so difficult to cajole the insurance company into paying even legitimate claims, we can rest assured there are very few fraudulent claims paid.

And this brings up the second big fear–cost. We fear that the government will rubber-stamp any sort of crazy high-cost medical procedure someone might want (or a doctor might prescribe). You never can tell when someone might just decide to have a tonsilectomy for fun or an amputation just for a sense of adventure. And since doctors make money doing these sorts of things, a doctor just might tell someone to have brain surgery for a hangnail. Or a doctor might bill for a liver transplant while actually treating a wart. Did I mention our trust in doctors is, well, lukewarm at best?

And thirdly, we are so fiercely independent, we find it difficult to trust anyone–even each other! We feel we must constantly be on the lookout for rip-off artists. We feel each family should be all but completely self-sufficient. We have grave difficulty with the idea of pooling resources (in the form of tax money) to provide health care for all. We have a suspicion that our neighbors will game the system or that doctors will over-prescribe medical treatments. It’s more than a little amazing that we are willing to pool risk (by buying health insurance) at all!

Yet, we have to wonder… Are the administrative costs of the insurance system eating up so much money and resources that our fears of a government system are simply laughable? Or are the possibilities of fraud (and there have been some zingers within Medicare) that might be associated with universal single-payer health care substantive enough that we should continue to live with the current system? Is our lack of trust in “others,” whoever they may be, rational, or a form of collective paranoia?

Our current system, with the attitudes that underlie it, is very costly; just ask an uninsured Oklahoman.

Arden Rea lives  in Oklahoma City.

Choice is Freedom ⎯ NOT!

Across our nation, Fourth of July celebrations have come to a close. Birds have devoured any potato chips left over from picnics in city parks; hot dog and ice cream vendors have packed up and moved on. We have celebrated freedom. Now we can concentrate on surviving the hot summer and getting the kids ready for the beginning of school, which comes all too soon.

Perhaps we should be less hasty to dismiss the idea of celebrating freedom, and ask a more fundamental question⎯what do we mean by freedom? What is, and is not, freedom?

We are free from a tyrannical governmental dictatorship. We are free to criticize our government, and there are limits on our government’s power. Most of all, we are free to enjoy what we’ve come to call the “American way of life.”

The American way of life always seems to involve choice. Economists like choice. Choice is a necessary condition for the functioning of that modern miracle, the perfectly competitive market (or if you like, free market). But choice and freedom are not necessarily the same.  Granted, in a dictatorship, there are few choices. And there is power exercised with the making of any choice. And with a choice comes responsibility for the outcome. But choosing from a dizzying number of alternatives (many of them meaningless) does not make us “free.”

We have more choices of products and services to buy than any other people in the history of humanity. Lemon-scented underarm deodorant? No problem. Lilac-colored, ocean-breeze-scented, skin softening  bath beads with aloe vera and vitamin E? We’ll sell them to you by the crate. Gooey chocolate junk food cupcake with so many preservatives it doesn’t need an expiration date? Order a truckload, we’ll deliver to your home!

So, what if I want clean air to breathe here in the city where I live? Sorry, no can do. What if I want water free of pollution? Sorry, that would hamstring the profitability of our business community. What if the families in my neighborhood don’t want to sell their homes and move in order for the children to get a good education? Realtors are very happy with this situation, thank you.

How free are we, when we can choose from a plethora of consumer electronics and 700 flavors of chewing gum, but have minimal control over alternatives affecting our health, education, or employment? Are there options we need that are unavailable to us? Have the corporations that sell to us, our city councils, employers, or legislators in Washington failed to provide alternatives that we genuinely need or want? Or have these elite and powerful people purposefully chosen to preclude key options, thus  replacing freedom with mind-numbing superficial choice?

There are times when choice masquerades as freedom. The power we can exercise over inane alternatives placates our desire for freedom and leaves us with the illusion that freedom is abundant, when, in fact, it is in danger of fading away or may be already gone.

Arden Rea lives  in Oklahoma City.